Progressive regressivity in Washington State

If there is one state that suffers from political split personality, the Evergreen State has to be it. A “light blue” state in today’s spectrum of Blue-Red politics, its regressivity in matters of taxation should bring that assumed mild liberal ism to question.

When one hears that Washington is the seventh highest taxed state in the nation (per capita), while taking honors in providing the highest minimum wage for any state, some may readily assume that this piece of the Oregon Territory talks and walks progressive taxation. Sorry… wrong conclusion, friends!

Lack of a progressive state income tax, an onerous sales tax and other regressive revenue gathering measures give George Washington’s head portrait a truly red face as it takes center stage in the state’s flag.

It’s not our intent to tackle Washington State’s politics (or policies) of taxation, since for better or for worse there are 147 legislators elected to deal with this economic, moral and social dilemma. Our quarrel has little to do with calling for an overhaul to the present system; instead, it telescopes to one specific recent form of revenue gathering: gambling- not profits from gambling, a blatant misnomer, but revenue from gambling.

Gambling! Recently I saw a form of social graffiti which read something to the effect that “gambling is a tax that smart people impose on stupid people.” I would modify that harsh pronouncement by saying that “gambling is a tax-reform avoidance scheme adopted by politicians without backbone who care little about people in society’s lower rungs.” Although advertised as recreation, it is regressive tax collection affecting the distribution of wealth… but in the wrong direction, from the have-nots to the haves. [In 1997, the National Gambling Impact Study Commission found that players with annual incomes under $10,000 spent almost three times as much gambling as those with incomes over $50,000.]

Our case against gambling as a form of taxation is approached from a socio-economic vantage point, not a moral one. Gambling cannot be good for society when its tax regressive aspects foment an already great level of wealth inequality, the largest by far among the world’s industrialized nations. And for all its worth, gambling certainly produces no new wealth for the economy while adding to the well-known negatives, such as welfare costs and crime management.

So far revenue from gambling in Washington State is staying within the nationwide share average (2-3 percent) of own-source revenue (not counting money from the federal government) which remains a manageable figure for such unstable revenue source. But it can creep up when left up to politicians ( South Dakota is up to 7%) as more Tim Eymans-types step up to the regressive tax plate.

One thing that gambling faithfully promotes is irresponsible government. A recent study by the Tax Foundation scrutinized state lotteries and found them to be contrary to sound state tax policy. To quote Alicia Hansen from her Lotteries and State Fiscal Policy, “State-run lotteries make state tax systems more regressive, less transparent, and less economically neutral.” Of course, promoters of gambling as a form of revenue will insist that purchasing a lottery ticket is not actually a tax since it’s voluntary. But it’s as much a tax as a sales tax or an excise tax, and far more regressive.

Dubbed by the Census Bureau as “miscellaneous revenue,” lotteries bring added insult to injury as state lawmakers are allowed to establish and expand them without admitting that they are raising taxes. Case in point: this past week we saw the number of drawings on both Lotto and Quinto increase by 50%... just like that! To Wednesday and Saturday drawings they have added Monday night. But no one seems to care. More funds to be collected from those who can least afford it; thus promoting the widening of an already abysmal economic gap.

Progressively, Washington State politicians appear to be getting more and more regressive; but since we help elect them, “regressive is us.” Back to the caveat emptor of old… how sad!